Big Oil Rakes In Billions, Still Complains Taxes Are Too High

Big Oil Rakes In Billions, Still Complains Taxes Are Too High

The President rolled out his FY2013 budget recently, which includes eliminating $40 billion in tax breaks from Big Oil companies, such as BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. Meanwhile, the American Petroleum Institute's response would have you believe that cutting the subsidies would be the equivalent of moving back into their parents' basement.

It's propaganda at its most repetitive, crying that they are “job creators” and that it's so “unfair” to raise taxes because they already contribute millions to the economy every day, and if you do they swear to god prices will rise and the inevitable dependency on foreign oil will bring about the apocalypse itself if you don't let them have their way.

That's like Donald Trump begging to not get kicked out of rent-stabilized, low-income housing even when raking in billions annually, and then threatening to trash the place once the landlord actually puts up an eviction notice.

As for being “job creators”, it's a bit of a far-fetched label when oil companies have cut more than 11,000 jobs over the past few years, despite record profits.

And while those record profits have increased their earnings 75%, production of oil and petroleum products decreased by 4% compared to the previous year. Fewer jobs, fewer products, more profits, and they are still claiming tax breaks are necessary to create jobs and increase production.

API also claims that the oil and gas industries “pay taxes at far higher effective rates than most other industries.”

Lower tax rates are supposed to be a trade-off to spur reinvestment, but big oil companies even fail at that. In 2011, $38 billion was spent on buying back stock (which lines the pockets of top executives, not workers) and had $58 billion in their corporate savings account.

If you throw all that together, Big Oil companies made $137 billion, spent $38 billion on buying their own stock, put $58 billion into savings, all the while getting rid of thousands of jobs and lowering their product output.

Yet they're complaining that taking away tax breaks will just be too hard and is an unfair punishment.

Perhaps instead of $40 billion in subsidies, the government should send them a $40 billion violin.

Previous Comments

“Perhaps instead of $40 billion in subsidies, the government should send them a $40 billion violin.”

Wow, only $40B now? I’ve seen much higher estimates. I think that only takes into account domestic subsidies.

When are the free market advocates going to fight for the removal of fossil fuel subsidies and advocate a level playing field? Let the free market do its job and remove the artificial price people pay at the pump or on their power bill.

“As for being “job creators”, it’s a bit of a far-fetched label when oil companies have cut more than 11,000 jobs over the past few years, despite record profits.”

Maybe they think that all the jobs that are created to clean up their mess is a good thing.

Judging by the articles on Desmogblog, the intent of the articles is not to educate, so much as it is to spread propaganda and advance a leftwing narrative. This article is no exception. Clearly your intent is not to win any debate – the facts simply don’t support your claims – but to preach to the converted.

I notice you repeatedly make a point of describing the oil and gas industry in terms of gross industry profit – while carefully avoiding the much more honest fact of NETPROFITMARGIN.

But that wouldn’t advance your deceptive narrative, would it?

In the case of oil and gas, the most recent industry average net profit margin is a rather modest 7.9%.

http://biz.yahoo.com/p/sum_qpmd.html

That’s right, “Big Oil”, as you like to call it, made the same as the cleaning products industry in net profit. To put that in perspective, that’s less than HALF the profit margin of the soft drink industry, 15%.

And since when is an industry which pays far more in taxes, royalties and licensing fees being “subsidized” by what it might qualify for in tax credits available to most any other industry? Surely this is some bizarre new definition of “subsidy”.

What you say may be true, but there HAS to be a bad guy out there somewhere, right? What about the Koch bros, aren’t they the bad guys?

Lol! It’s refreshing to see someone spell it out as you have, PJames, but you’ll hardly sway any of the regulars in this forum. They believe what they are spoon fed by this group of paid propagandists at Desmog.

“the intent of the articles is not to educate, so much as it is to spread propaganda and advance a leftwing narrative.”

Obviously, the only narrative your confirmation bias is going to accept will come from a right wing perspective then.

“I notice you repeatedly make a point of describing the oil and gas industry in terms of gross industry profit – while carefully avoiding the much more honest fact of NETPROFITMARGIN.”

Because that is the actual figure before capex, opex, cogs etc is taken into account. Anyone who has been in business can tell you, that at that point, the money can effectively be siphoned off. Clever accounting can really make a difference.

“To put that in perspective, that’s less than HALF the profit margin of the soft drink industry, 15%.”

Coca cola has a product that requires billions in government investment to clean up spills, or mitigate CO2 emissions? Coca cola has protectionist tariffs enforced on its competitors? Coca cola has a price that is on par with market levels, oil & coal do not. Coca cola can claim a depletion tax break as their stock levels go down? Coca cola has the US go to war on its behalf & negotiate coca cola pipelines throughout other countries on its behalf?

http://www.oecd.org/dataoecd/8/43/46575783.pdf

“And since when is an industry which pays far more in taxes, royalties and licensing fees”

By your limited worldview.

“being “subsidized” by what it might qualify for in tax credits available to most any other industry? Surely this is some bizarre new definition of “subsidy”.”

The International Energy Agency, The OECD& World Bank define it as:

“an energy subsidy is defined as any government action that lowers the cost of energy production, raises the revenues of energy producers, or lowers the price paid by energy consumers”

“The federal and Alberta governments struck up a secret, high-level committee in early 2010 to coordinate the promotion of the oilsands with Canada’s most powerful industry lobby group, a document obtained through an access to information request reveals.

“The committee brought together the president of the Canadian Association of Petroleum Producers (CAPP) with deputy ministers from Natural Resources, Environment Canada, Alberta Energy and Alberta Environment to synchronize their lobbying offensive in the face of mounting protest and looming international regulations targeting the Alberta crude.

“I’m old-fashioned enough to believe that there should be a separation between oil and state, but with these types of secret committees it’s hard to see any daylight between them,” said Keith Stewart, a climate and energy campaigner with Greenpeace.

“He said the federal government is working increasingly closer with oil companies as they attempt to polish the image of the “dirtiest oil on earth” and undermine climate-change policies in the United States and Europe that stand to curb the industry’s expansion.

“We’re seeing that the government is becoming the advocacy arm of the oil industry, whether that’s to kill environment regulations abroad or to rhetorically attack environmental groups and First Nations,” Stewart said.”

“I mention health care because its always chronically short of cash. Yet here we are just handing the stuff out to these corporate bums.”

And yet, you’ve already conceded the oil and gas industry is a net revenue generator for Alberta taxpayers. In other words these “corporate bums” are the ones who are handing cash to the government.

These would be the same “corporate bums” who presumably make it possible for you to earn a living … or at least you would, if you ever stooped so low as to accept a paycheque from your “corporate bum” employers, LOL!

I didn’t claim anything vaguely like what you are attempting to shove in my mouth.

I’m saying that they aren’t paying their fair share of the bills, like I do. They aren’t entitled to getting anything back any more than I am.

My statement makes perfect sense. You see I contribute a healthy $24,000 a year to our health care system (via taxes), but being in perfect health, I’m not costing it any. So… I should just get all my money back because I’m a net contributor. That is your logic.

That is no different than oil companies paying taxes, then demanding a claw back. “Oh oh oh these environmental regulations cost money… we’re less rich, so give us money.”

“Corporate welfare is a pejorative term describing a government’s bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations.”

Even Cato thinks its a real problem. Surely that’s a source you trust.

“According to the Cato Institute, the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006. Recipients included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric.”

And, as leading climate scientist, Dr. James E. Hansen, has pointed out time & again, a climate catastrophe in the making.

“Advertisements that tar sands and shale oil are beneficial, providing energy independence and jobs, repeated hundreds of times a day, are an attempt to brainwash the public into supporting policies that enrich the few, while screwing the public, especially young people.”

“You cannot turn on television without seeing advertisements for clean coal, clean tar sands (sanitized as “oil sands”), clean gas fracking. However, no matter what efforts are made to minimize damage during the mining process, Figure 1 implies that the only way to retain a planet looking like the one that has existed the past 10,000 years, with stable shorelines and a reasonably stable climate, is to phase out fossil fuels as conventional oil and gas are depleted. Most of the total coal resource and unconventional fossil fuels should be left in the ground.”

Your argument stating that because these industries pay someone enough “to earn a living” and so should be considered a good thing overall, is nonsensical in that the same thing could be said of a slave-master in the Old South……without the food and shelter they provided their slaves, it would have been extremely difficult for most of them to simply survive given the system and society they all found themselves in. And indeed, I can say with certainty that many of those plantation owners, and to be sure, even a few of the “uncle Tom’s” among the slaves rationalized the status quo by pointing out that very fact….just as you have.

Now to be sure, I’m not drawing an equivelance between today’s work environment and slavery. Not at all. I’m merely pointing out the poverty of your own argument. It’s not about whether they pay their workers or not, but about matter’s of fairness…about truth-telling, and about the neccesity of having these giant corporations to step up and bare some of the weight imposed on everyone else by the economic downturn. That they do this as part and parcel of one’s own social responsibility….a responsibility that every other person* in society is required to entend by law.

*if they want to assume the legal definition then they can assume the legal responsibility as well, no?

FYI, education, and hopefully (tho doubtful) enlightenment, there’s a very good reason why both anti-AGW & anti-Darwinism occurs primarily among those who also self-identify as “conservative” and/or “right-wing” individuals. And that is that researchers consistently find that conservatives are the one’s who are far more likely to engage in avoidence behaviors, confirmation biases, and other forms of motivated cognition than any other sociopolitical subgroups of a given society - and certainly much more likely than those who identify with left-wing or liberal ideas and belief systems.

So you’re skating on extremely thin ice when you make assertions regarding the gullibility of those who agree with the main idea of this blog when you make that assumption based on their leftwing/liberal political stance.

If you don’t believe it (and I know you won’t because…..) go to Google Scholar and enter the terms “motivated cognition, conservatism”.

Incidentally, two investigations of Bruce Carson, by the Lobbying Commissioner and the Conflict of Interest Commissioner, were completed three months ago, but the results have not been released by the Harper Conservative government:

Well, if you are so much against subsidies, then you must be completely beside yourself with outrage at the annual $1.2 billion subsidy given to the CBC – which happens to pay back to the taxpayer roughly, um, …. $0.

Subsidies & other tax expenditures for mature fossil fuel industries no longer benefit the taxpayer but merely increase the record $137,000,000,000 mega-profits of Big Oil’s Big Five even as oil production decreased. Such subsidies are even more counter-productive when you consider that fossil fuels spew gigatons of CO2 emissions & other pollutants that cause mega-billions in damages to our health & property, air & water, forests & wetlands, ecosystems & climate.

The public is much better served by shifting these subsidies & tax expenditures from the mega-profits of dirty fossil fuels & tar sands over to incentivize private investment to rapidly develop & deploy clean, renewable energy technologies to reduce our reliance on dirty fossil fuels & foreign oil.

Sure, that way we can be on the hook for $100,000 every time GM sells a Chevy Volt. Well, up until the point were they closed the assembly line and laid off the workers, because nobody was actually buying them.

Yes, let’s go down the same road that Germany, Spain, the UK, and Denmark have done, only to discover the bottomless money-pit that is “alternative energy”.

That’s right, PJ, and in addition to the taxpayer subsidies & other tax expenditures, the external costs are also picked up by the taxpayers in Canada & the U.S. – you know, the mega-billion-dollar damages to taxpayer health & property, air & water, forests & wetlands, ecosystems & climate caused by the gigatons of CO2 emissions & other pollutants from unabated extraction of oil from the tar sands & the refining & burning of fossil fuels.

And the external costs of the unconscionable destruction of Alberta peatlands which releases mega-metric tons of CO2 equivalent have not been factored in to Big Oil costs.

“A new study in the Proceedings of the National Academy of Sciences finds that existing industry plans for exploiting the tar sands will destroy over 29,500 hectares (65%) of local peatland. Peatlands are better known as bogs, moors, mires, and swamp forests. Their decaying organic matter is rich in carbon and already emerging as a major amplifying carbon-cycle feedback.”

“We quantified the wholesale transformation of the boreal landscape by open-pit oil sands mining in Alberta, Canada to evaluate its effect on carbon storage and sequestration. Contrary to claims made in the media, peatland destroyed by open-pit mining will not be restored. Current plans dictate its replacement with upland forest and tailings storage lakes, amounting to the destruction of over 29,500 ha of peatland habitat. Landscape changes caused by currently approved mines will release between 11.4 and 47.3 million metric tons of stored carbon and will reduce carbon sequestration potential by 5,734–7,241 metric tons C/y. These losses have not previously been quantified, and should be included with the already high estimates of carbon emissions from oil sands mining and bitumen upgrading. A fair evaluation of the costs and benefits of oil sands mining requires a rigorous assessment of impacts on natural capital and ecosystem services.”

“There is strong evidence that tar sands pipeline spills occur more frequently than spills from pipelines carrying conventional crude oil because of the diluted bitumen’s toxic, corrosive, and heavy composition. Tar sands oil spills have the potential to be more damaging than conventional crude oil spills because they are more difficult and more costly to clean up, and because they have the potential to pose more serious health risks. Therefore both the frequency and particular nature of the spills have negative economic implications.”

$137 billions are record mega-profits (aka windfall profits) in one year for the Big Oil Big Five alone, much of which is used to buy back their own stock & lobby Parliament & Congress. No reason for the taxpayer to subsidize their stock mega-buybacks & lobbying.

Last year, Big Oil’s Big Five — BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell — who are still gangbanging Alberta & the American taxpayer, had record profits of $137 billion & still received $2 billion in U.S. taxpayer subsidies but produced less oil. So where did they put those mega-billions to work?

They produced 4 percent less oil and “oil equivalent” in 2011 compared to 2010.

They spent a total of $38 billion, or 28 percent, of their profits to repurchase their own stock.

They are sitting on more than $58 billion in cash reserves as of the end of 2011.

They spent $1.6 million on campaign contributions and $65.7 million on lobbying efforts.

For every $1 spent on lobbying in Washington, the big five received $30 worth of tax breaks.

With all its taxpayer subsidies, Exxon Mobil, the biggest of the Big Oil Big Five, only paid $39 million federal income tax on its $9.91 billion profits over the last two years. That’s an effective tax rate of 0.4%.

“Over the past two years, ExxonMobil reported $9,910 million in pretax U.S. profits. But it enjoyed so many tax subsidies that its federal income tax bill was only $39 million—a tax rate of only 0.4 percent.”

And in 2009, XOM paid no federal taxes at all, nada, on its $2.6 billion domestic profits by funneling its profits through the Cayman Islands.

“The company paid no taxes at all to the U.S. federal government in 2009 on its domestic profits of nearly $2.6 billion. It appears that they avoided the tax man that year by legally funneling their profits through wholly owned subsidiaries in countries like the Cayman Islands, and reinvesting their earnings overseas.”

For the 3 year period 2008 to 2010, Exxon Mobil paid an average 17.6% effective corporate tax rate on $6.8 billion.

“Exxon Mobil registered an average 17.6 percent federal effective corporate tax rate on its annual earnings in the three years spanning 2008 to 2010. Its average domestic profits exceeded $6.8 billion.”

Carbon-dense coal & oil have very important applications in the clean energy economies of the 21st Century, PJ, just not as extracting by the giga-barrel & gigaton & burning as dirty, polluting fossil fuels, esp. on an anthropogenically overheating planet.

I listen to it going to work, from work, and on weekends Randy’s Vinyl Tap. He gets letters all the time (and from all over the world) about how his show is so much better than anything you find outside of CBC. Many even come from the US where they can’t get this kind of entertainment. Its not possible to enjoy it.

If they went off air, I’d probably stop listening to radio.

It works the way it does because its not a business. (Why you think it is, is simply confusing to me.) They seem to be very sensitive to local interests. They rarely if ever jump on oil and gas or even global warming in Alberta.

http://www.cbc.radio-canada.ca/about/mandate.shtml

Now… $1.1 Billion = $32 per person or $128 for my household. I have no problem with that.

Back in the USA, National Public Radio (NPR) receives only 2% of its funding from the federal government. Most all is from programming fees, grants from foundations or business entities, contributions and sponsorships.

In Canada the CBC has been sucking the public teat since it’s inception.

CBC Radio is 100% taxpayer funded, even as the listenership continues to plummet to near undetectable levels. Okay, sure, there are a few die-hards who tune in to the CBC’s phone-in shows about “What’s your favourite muffin?”, or the second-rate Garrison Keillor immitator, but they’re mostly shut-ins who can’t reach the dial, and their vegetative state is to be pitied more than anything.

CBCTV is a combination of government subsidy, but they also run commercials, so as to undercut legitimate private broadcasters, who, ironically have to pay taxes, which funds their competitor. The French CBC channels run porno movies at least.

Democracy is utterly dependent upon an electorate that is accurately informed. In promoting climate change denial (and often denying their responsibility for doing so) industry has done more than endanger the environment. It has undermined democracy.

There is a vast difference between putting forth a point of view, honestly held, and intentionally sowing the seeds of confusion. Free speech does not include the right to deceive. Deception is not a point of view. And the right to disagree does not include a right to intentionally subvert the public awareness.